On 21 June 2016, the NSW Government introduced surcharge purchaser duty “surcharge duty”, payable by foreign persons or entities purchasing residential property. As the name suggests, surcharge duty is payable in addition to transfer duty (previously known as stamp duty). When first introduced, surcharge duty was 4% of the purchase price/value. On 1 July 2017 it increased to 8%.

We have recently seen some changes to the Duties Act 1997 “the Act”, specifically, the addition of s104ZJA. This section of the Act provides:

1. an exemption from surcharge duty; and

2. a refund of surcharge duty, paid prior to the introduction of s104ZJA.

The exemption and refund apply to foreign-owned, Australian-based developers who satisfy the following conditions:

a. Following completion of the transfer, a new home was constructed on the land and then sold to a non-associated party without the home having been occupied (other than as a display home); or

b. The land has been subdivided for the purpose of the construction of a new home and then sold after the issue of a subdivision certificate.

No surcharge duty is payable if it is determined that foreign-owned, Australian-based developer is an exempt transferee. If the Chief Commissioner determines that the foreign-owned, Australian-based developer is likely to become entitled to a refund of the full amount of surcharge duty, then they may approve them as an exempt transferee. The approval as an exempt transferee is subject to conditions and can be revoked at any time.

Time restrictions apply in relation to making an application for a refund of surcharge duty.

We are pleased to have been the first firm to apply for and to have received, an exemption from surcharge duty on behalf of our client.

It is not currently possible to process an exemption from surcharge duty on EDR. As such, an application is required to be made by written submission to Revenue NSW.

The application for an exemption from surcharge duty must include the grounds for exemption and must enclose the Contract, Transfer and Purchaser/Transferee Declaration together with a statutory declaration stating the Purchaser will meet the requirements set out in s104ZJA of the Act.